The role of central bank capital

A new ECB paper argues that central banks hold adequate capital. Paul Brione assesses the argument for CentralBankNet.

It is generally recognised that it is important for a central bank to have a strong balance sheet and adequate capital, but there is little consensus either on what level is "adequate", or why precisely it is needed. Central bankers who feel that it is important to have a cushion of capital should be encouraged by an ECB paper (see related links) published in September. This p